Would Shareholders Who Purchased Lucara Diamond's (TSE:LUC) Stock Five Years Be Happy With The Share price Today?

It is a pleasure to report that the Lucara Diamond Corp. (TSE:LUC) is up 33% in the last quarter. But that is little comfort to those holding over the last half decade, sitting on a big loss. Indeed, the share price is down 72% in the period. So we're hesitant to put much weight behind the short term increase. But it could be that the fall was overdone.

View our latest analysis for Lucara Diamond

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

In the last half decade Lucara Diamond saw its share price fall as its EPS declined below zero. At present it's hard to make valid comparisons between EPS and the share price. But we would generally expect a lower price, given the situation.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into Lucara Diamond's key metrics by checking this interactive graph of Lucara Diamond's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered Lucara Diamond's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Lucara Diamond's TSR of was a loss of 63% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

Lucara Diamond shareholders have received returns of 20% over twelve months, which isn't far from the general market return. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 10% over the last five years. While 'turnarounds seldom turn' there are green shoots for Lucara Diamond. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Lucara Diamond , and understanding them should be part of your investment process.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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